Halister News

(Bloomberg) -- It is possible that Bank of Japan will allow 10-year JGB yield to rise beyond zero% as real interest rates are falling while break-even rates are on an upward path, says Naoya Oshikubo, Tokyo-based rates strategist at Barclays.

• Investors are watching how far BOJ will let yields climb;
  • Close attention being paid by market participants to whether central bank will try to halt increase in 10- year yield at zero or will allow it to rise beyond that level
• BOJ may use fixed-rate JGB purchase operation in order to to halt the increase in yields
• Strong demand is expected at 0%, making it difficult for the rate to move to positive territory without further increase in U.S. Treasury yields and USD/JPY;
  • However, cannot deny possibility of seeing it before the end of this week
• Yield on 10-year yield adds 1.5bps to 0%, highest since Sept. 21 when benchmark yield touched 0.005%
• NOTE: BOJ introduced yield curve control policy on Sept. 21

(Bloomberg) -- December JGB contract drops through 151.00 for first time since Sept. 6, now down 22 ticks to 150.90.

• Support: 150.87, Sept. 5 low; 150.66, August 2 low
• JGB 10-year yield hits 0% for first time since BOJ pledged to keep yield near zero on Sept. 21; chart here
• Japan 5-year bond auction draws lower bid/cover; story here
• NOTE: Mark Cranfield is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- Here’s a roundup of Indian co. debt-rating changes.

• To get this story sent to your inbox real-time, run NI INRATINGS , click on Display & Edit, then Set Alert Delivery

DOWNGRADES

• Admiron Life Sciences
  • Long-term bank facilities to D from B+ at Care
  • Cites delays in servicing debt obligations

• Om Besco Rail Products
  • LT bank facilities to D from BB at Care
  • Cites stretched liquidity position

• Shogini Technoarts
  • LT bank facilities to BB+ from BBB- at Crisil
  • Cites weaker operating performance

• Tata Teleservices
  • LT bank facilities cut to A- from A at Crisil
  • Cites lower-than-expected improvement in financial risk profile

(Bloomberg) -- Investors are rushing to sell ringgit since last week due to outflows from fixed income market and not just because of the dollar strength, Sim Moh Siong, currency strategist at Bank of Singapore says.

• Foreign positioning in ringgit bond market has been “quite crowded” since BNM unexpectedly cut rates in September
• ’’There’s still nervousness out there in terms of the dollar strength,’’ Sim says
• Yield on 3.9% govt bond due Nov. 2026 climbs 11 bps to 4.252%, highest since Dec. 17, 2015, according to Bursa Malaysia and BNM prices
• Ringgit falls 0.2% to 4.3375 per dollar after touching 4.3525, weakest level since Jan. 22, according to onshore prices.

(Bloomberg) -- Japan sells 2.4t yen ($22.2b) of 0.1% govt bonds today maturing in Sept. 2021.

• Lowest accepted price of 101.27 is based on median est. of 13 traders surveyed by Bloomberg
  • Six estimate 101.27, four predict 101.26 and three forecast 101.28
  • Finance Ministry announces results at 12:45pm Tokyo time
• Debt to be auctioned today fetched 101.215 on Nov. 14 in when-issued trading: JSDA data
• Auction may go smoothly as 5-year yield are rising, Katsutoshi Inadome, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities writes in note today
  • While 5-year rate remains negative territory, demand from oversea investors may support
• NOTE: Japan’s 5-yr notes offer fixed-coupon equivalent of 2.348% for investors who use these swaps to exchange dollars with yen and buy the debt, based on Bloomberg data

(Bloomberg) -- USD/IDR may remain in 13,200-13,500 range near-term if Bank Indonesia leaves benchmark rate unchanged this week to support rupiah against the strengthening dollar, Bloomberg strategist David Finnerty writes.

• Rupiah has come under pressure against the USD this past week as speculation over Trump’s stimulative economic policies sent U.S. yields soaring, and boosting the greenback
  • Rupiah’s losses between Nov. 9-11 following Trump’s election victory, coincided with global funds net selling of $209.1m in Indonesian equities and $112.1m in local bonds
• U.S. yields eased today for the first time since the U.S. vote; 10-yr yield is -5bps to 2.2153%
  • U.S. 10-yr yield may face initial resistance between 2.32%-2.37% level, the highs reached between November and December 2015, followed by several other resistances up to 2.50%
• Bank Indonesia will leave 7-day reverse repo rate unchanged at 4.75%, according to 12 of 14 economists in Bloomberg survey; 2 forecast a rate cut of 25bps; decision due Nov. 17
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- If Indonesia’s exports expand as much as expected in October, USD/IDR may leave this month’s high of 13,545 intact, Bloomberg strategist Andrew Robinson writes.

• USD/IDR currently down 0.3% at 13,328; pair hit 13,545 last Friday, highest since June 3
  • Technical support seen at 200-DMA of 13,237
  • 14-day RSI is at 75, heading lower toward overbought threshold
• Exports probably rose 3.60% y/y after contracting 0.59% in September, median est. in Bloomberg survey shows; that would be fastest growth since September 2014
  • Ests. range from +0.90% to +7.71%; data due today
• Imports likely grew 4.90% y/y from -2.26% in September while the trade surplus is seen narrowing to $1b from $1.2b, other surveys show

• NOTE: Andrew Robinson is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice